What is Lipstick on a Pig in Real Estate Investing?

I am not sure the first time I heard the term “Lipstick on a Pig” but it stuck with me because it was funny at the time. However, I started relating it to the rehab work I was doing on homes because I was rehabbing very ugly (“pigs”) at the time.

What is Lipstick on a Pig in Real Estate Investing? I discovered that by doing minimal work on each property no matter how bad (ugly) it was, I was able to add substantial value to the property well in excess o f the rehab that I did. Actually, these partial rehabs included mostly patch and paint of the property and never any kitchen or bathroom remodeling.

The floor coverings (tile, carpet or wood laminate) should be considered as part of the patch and paint if you intend to “wholetail” the property. Wholetailing is the process of rehabbing in a minimalist manner for speed and cost. This rapid rehabbing process results in high speed combined with low cost and the end result is being able to sell the proper ty very near retail value (full market value).

As an example of the power of this “lipstick on a pig” process, our most successful Mentor Student does about 125 to 130 short sales a year. He wholesales these properties and was averaging about $10,000 to $15,000 profit per deal until he talked to me about how to kick up his profits.

I suggested he do the lipstick on a pig rehab especially since he was intentionally seasoning his wholesale deals for a couple of weeks. Some of these properties may have had deed restrictions but generally he felt most comfortable holding the properties before selling them.

Obviously this meant he had to buy and close on each one which required lots of cash. He had foreign private money investors who loaned him the money he needed at very favorable rates which are nowhere near hard-money rates.

The Student called me unexpectedly one day and asked me to have lunch with him. As I sat with him he suddenly burst out with “You made me more than a million dollars extra last year!” He went on to explain that he started putting lipstick on his properties and was now netting an additional $10,000 net profit on every deal. That is 125 x $10,000 = $1,250, 000 extra per year. He spent an average of less than $2,000 per property!

As an estimate of what a lipstick profit increase should d o for you is an additional 50% to 100% of the wholesale profit that you were originally expecting. Typically, if you have to redo the floor coverings (tile, wood, carpet, etc.) you should try and keep your budget to about 2% to 5% of the property purchase price. This is a guideline and can vary greatly because of the condition of the property before you start.

If you have the time, I strongly suggest you do some minimal landscaping as this is the first impression your potential buyers will see. If the exterior is plain ugly the only people who may stop are likely other investors.

What is likely most important is to keep your total expenses in control for a lipstick rehab or soon you’ll be doing a full rehab before you know it – fixing kitchens and bathrooms is not lipstick on a pig but a full rehab.

To your limitless success,

Dave Dinkel

Real Estate Mentor Program Founder

change your life mentoring click button j 300x236 1

Visit davedinkel.com for full privacy policy, terms of use, etc.  Be sure to contact us through the website at davedinkel.com if you have questions or concerns ([email protected]).  Results mentioned in this presentation and any video, article, and/or material related to Dave Dinkel and his associated businesses are not typical nor are a guarantee of any earning potential.  No advice is to be construed as legal, accounting, or professional advice EVER.  Please consult related licensed and qualified professionals before taking any action.  No person(s) mentioned in the articles and /or shown on videos received compensation in any form for their opinions.

What is Lipstick on a Pig in Real Estate Investing?

I am not sure the first time I heard the term “Lipstick on a Pig” but it stuck with me because it was funny at the time. However, I started relating it to the rehab work I was doing on homes because I was rehabbing very ugly (“pigs”) at the time.

What is Lipstick on a Pig in Real Estate Investing? I discovered that by doing minimal work on each property no matter how bad (ugly) it was, I was able to add substantial value to the property well in excess o f the rehab that I did. Actually, these partial rehabs included mostly patch and paint of the property and never any kitchen or bathroom remodeling.

The floor coverings (tile, carpet or wood laminate) should be considered as part of the patch and paint if you intend to “wholetail” the property. Wholetailing is the process of rehabbing in a minimalist manner for speed and cost. This rapid rehabbing process results in high speed combined with low cost and the end result is being able to sell the proper ty very near retail value (full market value).

As an example of the power of this “lipstick on a pig” process, our most successful Mentor Student does about 125 to 130 short sales a year. He wholesales these properties and was averaging about $10,000 to $15,000 profit per deal until he talked to me about how to kick up his profits.

I suggested he do the lipstick on a pig rehab especially since he was intentionally seasoning his wholesale deals for a couple of weeks. Some of these properties may have had deed restrictions but generally he felt most comfortable holding the properties before selling them.

Obviously this meant he had to buy and close on each one which required lots of cash. He had foreign private money investors who loaned him the money he needed at very favorable rates which are nowhere near hard-money rates.

The Student called me unexpectedly one day and asked me to have lunch with him. As I sat with him he suddenly burst out with “You made me more than a million dollars extra last year!” He went on to explain that he started putting lipstick on his properties and was now netting an additional $10,000 net profit on every deal. That is 125 x $10,000 = $1,250, 000 extra per year. He spent an average of less than $2,000 per property!

As an estimate of what a lipstick profit increase should d o for you is an additional 50% to 100% of the wholesale profit that you were originally expecting. Typically, if you have to redo the floor coverings (tile, wood, carpet, etc.) you should try and keep your budget to about 2% to 5% of the property purchase price. This is a guideline and can vary greatly because of the condition of the property before you start.

If you have the time, I strongly suggest you do some minimal landscaping as this is the first impression your potential buyers will see. If the exterior is plain ugly the only people who may stop are likely other investors.

What is likely most important is to keep your total expenses in control for a lipstick rehab or soon you’ll be doing a full rehab before you know it – fixing kitchens and bathrooms is not lipstick on a pig but a full rehab.

To your limitless success,

Dave Dinkel

Real Estate Mentor Program Founder

change your life mentoring click button j 300x236 1

Frequently Asked Questions

1. What Should I Do If a Seller Ghosts Me?

If you feel you have been ghosted, act decisively and quickly. If you have tried texting and calling, it’s time to drive by the seller’s location. I always take the recorded Notice of Interest or Memorandum of Contract to leave, so the seller knows it exists. Go by at a time when you know they will be there and don’t be confrontational, just get the facts.

In our experience with new investors, the chances of losing a deal with no contract is likely over 85%. Verbal commitments do not apply in contract law; get everything in writing, especially contract changes.

Different ‘gurus’ have different opinions, but our experience is finding motivated sellers and then a buyer for your deal. Ideally, you should be finding motivated buyers from day one, so you are ready when you find a seller. Buyers are easier to find as you can see at https://davedinkel.com/products/

Prevention only comes about by thinking a Black Hat wholesaler will be coming after your deal. First, educate the seller that an unscrupulous investor may come by and illegally offer more money, have the seller sign your “Notice to Homeowner,” stating that he understands he cannot accept another offer.

There is nothing illegal about changing their mind, it is called seller remorse and occurs about 25% of the time. However, if they have signed your contract, it can’t be cancelled for any reason unless acceptable to the investor/buyer.

If price is an objection, you need to find out how important it is to sell fast and for cash. If the seller isn’t under a time constraint, has a money issue, or has a personal dilemma, he may not agree to the price you need. Offer to help move and build it into your price before you make your offer. However, never give the seller money; only pay the moving company, and only after closing (escrow with a closing agent). If fear is the seller’s issue, break it down into what the real problem is and answer their objections one at a time.

You can get to the root of motivation for a seller by asking a few questions. First, “Why are you selling?”, “How soon can you close?”, and Are you ready to sign an AGREEMENT today, if not, what do I have to do to make you comfortable?’. The answers to these questions will determine the truth about your seller’s motivations.

The best times to involve your attorney in your deals are to have him review your contracting, review the signed contracts from the seller and end buyer, have him open escrow and start the title work, negotiate with city or counties for lien reductions or mortgage payoffs with lenders, and to close the transactions.” Your attorney is not the adversary; it’s the opposing party’s attorney who is a deal killer, and having your attorney allows him to help overcome this obstacle.

The key to successful prospecting and bringing back deals that didn’t close is to follow up until the property is transferred in the public record. Some of our deals have been where the seller came back to us months and years later because they felt comfortable with us and not the other “pushy” investors who contacted them.

Your contract’s most important clauses are inspection period (as long as possible), when the EMD must be deposited if at all, your ability to access the property, any added clauses specific to the property that will protect you against seller claims later that were verbal only.

Visit davedinkel.com for full privacy policy, terms of use, etc.  Be sure to contact us through the website at davedinkel.com if you have questions or concerns ([email protected]).  Results mentioned in this presentation and any video, article, and/or material related to Dave Dinkel and his associated businesses are not typical nor are a guarantee of any earning potential.  No advice is to be construed as legal, accounting, or professional advice EVER.  Please consult related licensed and qualified professionals before taking any action.  No person(s) mentioned in the articles and /or shown on videos received compensation in any form for their opinions.